Expectations Seem To Be A Bigger Problem For Emerson

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I'm starting to feel a little sympathy for the management team at Emerson (NYSE:EMR). While the recent financial performance from this industrial conglomerate hasn't been that great, it increasingly seems to me that a lot of the Street just waves off management's cautious commentary. If the Street is building up expectations ahead of what Emerson's own people say they're likely to do, I can't really fault the management for what happens.

In any case, I still think investors are too bullish on Emerson's prospects. I do believe the Climate business is do for a solid rebound and I like the company's underlying order trends in automation, but I do worry both about the company's long-term competitiveness in automation and whether expectations are still too high. At this point, I'd still not be a buyer of Emerson.

SEE: Conglomerates: Risky Proposition?

Another "Miss And Lower" Quarter?
The good news for Emerson shareholders with respect to this quarter is that it seems as though the sell-side was bracing for a tougher quarter as the weeks rolled on, and so there wasn't as much surprise.

Even so, revenue fell 2% as reported and about 1% on an organic basis. Revenue from process automation was up 3%, which was a respectable outcome relative to ABB (NYSE:ABB) and Honeywell (NYSE:HON). Industrial automation was down 7%, though, and that result is harder to spin to the positive. Network power dropped another 5%, Climate fell 2%, and the Commercial/Residential business saw organic growth of 4% for the quarter.

Overall, Emerson's profit performance was not particularly strong. Gross margin was flat with the year-ago period, which actually wasn't bad, but segment profits declined 9%. Only the Climate and Comm/Resi business showed year-on-year margin improvement, and Emerson posted a three-cent miss at the operating line relative to Street expectations.

SEE: Earnings: Quality Means Everything

Orders Seem To Be Getting Better, But Guidance Isn't
Management once again lowered its expectations for the year, albeit this time the change vis a vis Wall Street expectations wasn't all that consequential. To put this guidance in context, post-Q1, management was talking about 2% to 5% growth for the year. After Q2 that guidance went down to 1.5% to 2.5%, and now it's down to about 1% growth. This really isn't so much different than what companies in similar businesses like Eaton (NYSE:ETN), ABB, Honeywell, and Siemens (NYSE:SI) are seeing/saying, but it does show pretty clearly that the big second half rebound story isn't likely to come to fruition.

A Decent Value For Network Power, But Emerson Has Work To Do
Investors may be cheered to see the valuation that Emerson was able to secure for its Network Power business. This unit has been a laggard for some time now, with competitors like Eaton and Schneider and self-inflicted operational issues leading to poor performance. That said, while an implied value of almost $600 million is more than many expected, the structure of the deal (selling a 51% stake to Platinum Equity) doesn't strike me as the cleanest exit. Still, I imagine Emerson didn't find a crowd of buyers clamoring for this asset, so the company's options were likely limited.

With Network Power more or less resolved, Emerson may now be able to turn to other business. In Climate, I think the story is still a waiting game – I think that there's enough pent-up demand for companies like United Technologies (NYSE:UTX) and Emerson to do well, but it's likely to be a slower, shallower recovery than investors have been hoping for until recently.

Turning to automation, I think Emerson really has some work to do. While the order flow is looking better (process automation orders up about 8%, with industrial automation apparently troughing), I do worry that the company, like Eaton and Rockwell (NYSE:ROK), has over-invested in hardware and under-invested in software. Although Emerson had once approached Invensys (a company with a strong industrial software business) about a merger, it looks as though Emerson may allow Invensys to go to Schneider without challenging the latter's bid. There are still worthwhile properties in the industrial software space that Emerson could buy, but the clock is ticking and a failure to improve its software offerings could compromise long-term growth and competitiveness.

The Bottom Line
I'm presently looking for Emerson to produce about 4% long-term revenue growth and almost 7% long-term free cash flow growth – less than both Honeywell and ABB. I would also say, however, that Emerson has upside if the Climate business recovers faster than I expect and/or if the company can gain share in the process and industrial automation markets. Even so, as is, I think Emerson should trade around the mid-$50s today, and that target is supported by discounted cash flow, EV/EBITDA, and ROE/PBV.

Disclosure – At the time of writing, the author owned shares of ABB

Valuing Twitter vs. Facebook: Cheap or Expensive

Social media users can debate whether Facebook(FB) or Twitter is a better place to post a picture of their kid or a snarky comment.

Agence France-Presse/Getty Images

Now, investors are having a similar conversation: Which platform offers them a better value for their money?

Based on IPO price versus pre-IPO price, Twitter Inc. is taking a more-conservative approach to pricing than Facebook Inc. did. But by some measures, Twitter is being pitched to investors at a price that may make it appear more expensive than Facebook stock is right now.

The microblogging company has proposed an initial public offering price below where some investors already own the stock, and below where the company earlier this year pegged its own value.

Twitter's initial pricing range, $17 to $20 a share, sits just below where Twitter said it was valued in early September: $20.62 a share, based on private market transactions, the company said in its IPO filing.

It also sits below the levels at which some mutual funds marked their pre-IPO Twitter investments as of Sept. 30, at as much as $24.37 per share, according to public documents.

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In contrast, the upper end of Facebook Inc.'s initial IPO price range in May 2012 was well above its pre-IPO peg of its valuation.

Facebook set its initial IPO price range from $28 to $35 per share. The company had valued itself at $30.73 a share in January 2012. Facebook eventually priced its IPO at $38.

Using another measure for Twitter’s size, enterprise value, it is being pitched to investors at a valuation cheaper than where Facebook trades. Enterprise value represents a stock market capitalization minus a company's cash, plus its outstanding debt.

Measuring enterprise value against last-twelve-month sales puts Twitter at a discount of about 17% to Facebook, according to Rett Wallace, chief executive of Triton Research, a private-company research firm in New York.

But different assumptions about how to assess value can change the view of what's cheaper, observers said.

Brian Hamilton, chairman of Sageworks Inc., a private company data provider, looked at a measure of stock-market value to last year’s sales, which uses the company's market capitalization without adjusting for cash. Cash can help many young tech companies appear to be cheaper, because they tend to have lots of cash relative to their market cap.

By that measure, Twitter appears to be going public at a 38% premium valuation to where Facebook stands now, he said.

Some also suggest that factoring in things like the stock given to mobile ad firm MoPub Inc. when Twitter acquired it, share grants that will vest, or future stock that employees could create by exercising their options, could make Twitter seem expensive relative to Facebook.

Mr. Wallace, who noted the contrast on the enterprise-value-to-sales measure, found that including Twitter's additional potential shares, known as the “fully diluted” share count, could give the company a higher valuation that may make it look less attractive relative to Facebook today.

Twitter has about 150 million shares that could later be created, according to figures in the prospectus. That could add $3 billion to the valuation, bringing it to $14 billion, based on the $20 top of the projected price range.

"The dilution is huge," Mr. Wallace said. "And it appears that many of the options are already in the money," he added, referring to the fact that the options were granted at prices below where Twitter's stock is likely to trade, meaning they will likely be exercised and become shares.

Some investors also questioned whether comparing Twitter's price to Facebook's was wise, given that Facebook and other social media stocks have traded at an all-time high in the past week.

“We’re looking at Twitter going public at a time when valuations are very favorable. It would not be surprising for it to look cheap,” said Rick Summer, senior stock analyst at Morningstar. “The question is whether that same optimism is warranted" for Twitter.

Related: Telis Demos has details on MoneyBeat.

Hyatt Climbs On Q2 Beat As Rates, Occupancy Rises

Shares of Hyatt Hotels Corp. (H) were ahead by more than 5% in recent trading, following the company's strong second-quarter results.

The company said it earned $112 million, or 70 cents a share, up from $39 million, or 24 cents, a year earlier. Excluding one-time items, adjusted earnings rose to 43 cents a share from 24 cents.

Revenue climbed 7.7% to $1.09 billion.

Analysts were looking for per-share earnings of 30 cents on revenue of $1.07 billion.

Revenue per available room, a widely watched performance metric, grew 7.1% at comparable hotels. Occupancy increased to 79.8% from 79.2% and average daily rates moved up by 6.3%.

Owned and leased hotel operating margin expanded to 27.8% from 26.3%.

The company forecast $250 million in capital expenditures for the fiscal year.

FBR Capital Market's Nikhil Bhalla notes that after three misses in the past year, the Street's estimates have become more conservative. While he isn't surprised that markets are reacting positive to the report, he thinks it is still too early to tell if the results are sustainable, as he sees potential softness for group bookings and volatility for China and India properties.

Hyatt is up 16% in the past year.

BMW's New Electric Car Just Became a Major Problem

On Monday, BMW (NASDAQOTH: BAMXF  ) announced that the U.S. base price for its all-electric i3 will be $41,350, not including any federal or state incentives. For General Motors' (NYSE: GM  ) Chevy Volt, and possibly Tesla Motor's (NASDAQ: TSLA  ) Model S, BMW's move spells major trouble. Here's why.

The BMW i-Concepts i3. Source: Wikimedia Commons/Motohide Miwa. 

Bad news, GM
With a starting MSRP of $39,145 in 2012, the Volt was the best-selling EV, and it's not hard to see why. Really more of an electric hybrid than a straight EV, the Volt combines a 9.3-gallon fuel tank with a lithium-ion battery. This combination allows the Volt can go an estimated 38 miles on pure battery before switching to regular fuel, which extends the range to an estimated 380 miles. Because of this combination, the Volt cuts down on range anxiety, which is still a huge deterrent to getting consumers into EVs.

Now, compare the above to BMW's all-electric i3: According to BMW, the i3 has a pure-electric range of 80-100 miles, thanks to its lithium-ion battery, and has an optional range extender that lengthens that initial range by 80 miles. Plus, thanks to BMW's eDrive technology, a driver can extend the initial range up to 124 miles by putting the vehicle in one of the "EcoPro" modes.  

Right away you can see the problem. Not only does BMW's i3 go farther on pure battery power, but with the purchase of the optional range extender, range anxiety goes way down. More pointedly, the base MSRP for the BMW is only $2,000 more than the Volt. I don't know about you, but if I had to decide between spending $39,000 for a Volt, or $2,000 more for a BMW, I'm going with the BMW, hands down.

Tesla, this is bad for you, too
Right now, Tesla is the crème-de-la-crème of EVs. But it's competing against all-electric EVs like Nissan Motors' (NASDAQOTH: NSANY  ) Leaf, and Ford's (NYSE: F  ) Focus Electric. To put it simply, Tesla's Model S can drive circles around these cars. Yes, it's more expensive, but the technology, range, and precision of the Model S makes anything else seem almost silly in comparison. BMW, however, is a luxury brand with renowned German engineering, and its new i3, and the future i8 model, presents a new challenge for Tesla.

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Consider this: The i3, designed from the ground up as an EV, has received praise from some of the industry's harshest EV critics. As BBC's "Top Gear" drivers put it:

At first sampling, then, this is a compelling electric car. It's not the first on the market, but BMW has put some original thinking into almost every part of its design and engineering. It drives sweetly, is distinctively designed, and has the reassuring range-extender option if you are anxious about running flat. 

These are the same critics that gave Tesla's Roadster a less than glowing report -- in fact, Tesla sued the show for "libel and malicious falsehood" because of the review.  

What to watch for
The i3 isn't set to hit showrooms until the second quarter of 2014, and right now it's too soon to predict exactly how this will affect GM and Tesla's sales. However, given BMW's reputation, the i3's reviews, and the just released base price, this is something investors would do well to monitor.

Electric cars are gaining in popularity, but they're still a niche market. Ford, however, has its hand in EVs and is starting to make its presence known in China. China is already the world's largest auto market -- and it's set to grow even bigger in coming years. A recent Motley Fool report, "2 Automakers to Buy for a Surging Chinese Market", names Ford and one other global giant, poised to reap big gains that could drive big rewards for investors. You can read this report right now for free -- just click here for instant access.

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DELAFIELD, Wis. (Stockpickr) -- At Stockpickr, we track daily portfolios of stocks that are the biggest percentage gainers and the biggest percentage losers.

>>5 Big Stocks to Trade for Big Gains

Stocks that are making large moves like these are favorites among short-term traders because they can jump into these names and try to capture some of that massive volatility. Stocks that are making big-percentage moves either up or down are usually in play because their sector is becoming attractive or they have a major fundamental catalyst such as a recent earnings release. Sometimes stocks making big moves have been hit with an analyst upgrade or an analyst downgrade.

Regardless of the reason behind it, when a stock makes a large-percentage move, it is often just the start of a new major trend -- a trend that can lead to huge profits. If you time your trade correctly, combining technical indicators with fundamental trends, discipline and sound money management, you will be well on your way to investment success.

>>5 Sin Stocks to Protect Your Portfolio

With that in mind, let's take a closer look at a several stocks under $10 that are making large moves to the upside today.

Chelsea Therapeutics

Chelsea Therapeutics (CHTP) is a specialty pharmaceutical company focused on acquisition, development and commercialization of pharmaceutical products for the treatment of a variety of human diseases. This stock closed up 1.7% to $2.96 in Thursday's trading session.

Thursday's Range: $2.92-$3.01

52-Week Range: $0.73-$3.30

Thursday's Volume: 982,000

Three-Month Average Volume: 943,154

>>5 Hated Earnings Stocks You Should Hate

From a technical perspective, CHTP spiked modestly higher here right off some near-term support at $2.90 with above-average volume. This move briefly pushed shares of CHTP above its 50-day moving average of $2.97, before the stock closed just below that level at $2.96. This move is now starting to push shares of CHTP within range of triggering a major breakout trade. That trade will hit if CHTP manages to take out some near-term overhead resistance levels at $3.07 to $3.18 and then once it takes out its 52-week high at $3.30 with high volume.

Traders should now look for long-biased trades in CHTP as long as it's trending above some near-term support at $2.80 or at $2.70 and then once it sustains a move or close above those breakout levels with volume that hits near or above 943,154 shares. If that breakout hits soon, then CHTP will set up to enter new 52-week-high territory above $3.30, which is bullish technical price action. Some possible upside targets off that breakout are its next major overhead resistance levels at $4.20 to $4.40, or even $5.

Synta Pharmaceuticals

Synta Pharmaceuticals (SNTA) is a biopharmaceutical company engaged in discovering, developing an commercializing small-molecule drugs to extend and enhance the lives of patients with severe medical conditions such as cancer and chronic inflammatory diseases. This stock closed up 2.7% to $6.84 in Thursday's trading session.

Thursday's Range: $6.63-$6.90

52-Week Range: $3.76-$11.88

Thursday's Volume: 1.18 million

Three-Month Average Volume: 1.58 million

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From a technical perspective, SNTA rose modestly higher here right above its 50-day moving average of $6.39 with decent upside volume. This stock has been trending sideways and consolidating for the last three months, with shares moving between $5.55 on the downside and $7.85 on the upside. Shares of SNTA are now starting to trend within range of triggering a breakout trade above the upper-end of its recent sideways trading chart pattern. That breakout will hit if SNTA manages to clear some near-term overhead resistance levels at $7.10 to $7.30, and then once it clears its 200-day moving average of $7.54 with high volume.

Traders should now look for long-biased trades in SNTA as long as it's trending above its 50-day at $6.39 or above $6 and then once it sustains a move or close above those breakout levels with volume that hits near or above 1.58 million shares. If that breakout hits soon, then SNTA will set up to re-test or possibly take out its next major overhead resistance levels at $7.85 to $8.25. Any high-volume move above those levels will then put $9 into range for shares of SNTA.

Xoma

Xoma (XOMA) is a biopharmaceutical company engaged in the discovery, development and manufacture of therapeutic antibodies and other agents designed to treat inflammatory, autoimmune, infectious and oncological diseases. This stock closed up 3.4% to $4.84 in Thursday's trading session.

Thursday's Range: $4.66-$4.86

52-Week Range: $2.37-$5.54

Thursday's Volume: 1.13 million

Three-Month Average Volume: 1.20 million

>> 4 Big Stocks to Trade (or Not)

From a technical perspective, XOMA spiked higher here right off its 50-day moving average of $4.61 with decent upside volume. This move is quickly pushing shares of XOMA within range of triggering a near-term breakout trade. That trade will hit if XOMA manages to take out some near-term overhead resistance at $4.91 with high volume.

Traders should now look for long-biased trades in XOMA as long as it's trending above its 50-day at $4.61 or above more key near-term support at $4.30 and then once it sustains a move or close above $4.91 with volume that hits near or above 1.20 million shares. If that breakout hits soon, then XOMA will set up to re-test or possibly take out its 52-week high at $5.54. Any high-volume move above that level will then give XOMA a chance to tag $6 to $6.50.

Dyax

Dyax (DYAX) is a biotechnology company engaged in the discovery, development and commercialization of biopharmaceuticals for unmet medical needs. This stock closed up 4.2% to $6.80 in Thursday's trading session.

Thursday's Range: $6.45-$6.82

52-Week Range: $2.26-$7.28

Thursday's Volume: 1.09 million

Three-Month Average Volume: 915,237

>>5 Stocks Insiders Love Right Now

From a technical perspective, DYAX ripped higher here right above some near-term support at $6.22 with above-average volume. This stock has been trending sideways and consolidating for the last month, with shares moving between $6.13 on the downside and $7.28 on the upside. This move on Thursday is quickly pushing shares of DYAX within range of triggering a major breakout trade above the upper-end of its recent range. That breakout will hit if DYAX manages to take out some near-term overhead resistance levels at $7.07 to its 52-week high at $7.28 with high volume.

Traders should now look for long-biased trades in DYAX as long as it's trending above some near-term support at $6.22 or above its 50-day at $5.68 and then once it sustains a move or close above those breakout levels with volume that hits near or above 915,237 shares. If that breakout hits soon, then DYAX will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $10 to $12.

Aveo Pharmaceuticals

Aveo Pharmaceuticals (AVEO) is a biopharmaceutical company involved in discovering, developing and commercializing novel cancer therapeutics. This stock closed up 5% to $2.29 in Thursday's trading session.

Thursday's Range: $2.12-$2.35

52-Week Range: $2.01-$8.94

Thursday's Volume: 1.41 million

Three-Month Average Volume: 516,802

>>5 Rocket Stocks to Buy Now

From a technical perspective, AVEO jumped higher here right off its 50-day moving average of $2.14 with heavy upside volume. This move pushed shares of AVEO into breakout territory, since the stock took out some near-term overhead resistance at $2.23. Shares of AVEO are now quickly moving within range of triggering an even bigger breakout trade. That trade will hit if AVEO manages to clear some more near-term overhead resistance levels at $2.36 to $2.37 with high volume.

Traders should now look for long-biased trades in AVEO as long as it's trending above its 50-day at $2.14 and then once it sustains a move or close above those breakout levels with volume that hits near or above 516,802 shares. If that breakout hits soon, then AVEO will set up to re-test or possibly take out its next major overhead resistance levels at $2.83 to $3.08. Any high-volume move above those levels will then give AVEO a chance to re-fill some of its previous gap down zone from May that started just above $5.50.

To see more stocks that are making notable moves higher today, check out the Stocks Under $10 Moving Higher portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

RELATED LINKS:

10 Best Performing Stocks To Watch For 2014

>>4 Stocks Rising on Unusual Volume

>>5 Stocks Under $10 Set to Soar

>>Do You Own These Blue-Chips? Sell Them!

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

Do you mainly depend on past performance before you invest?

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While investing in stocks, bonds and mutual funds, past performance becomes a strong input in making investment decisions. Question, should keep on relying on it excessively or there are other indicators available to investors, on which they can rely on to make investment decisions.

While looking at past performance look at the future too...

However, for a lay investor, it will not be easy, as the famous economist, John Keynes had said, in the long run we are dead. As investment in stocks and mutual funds are normally long term, investors may use this indicator too to support their past performance data.

Past Performance is one of the factors to be considered before taking the investment decision and past performance is not the only factor to be considered. Are you relying mainly or only on the past performance?  It is like looking at the rear view mirror and driving. You are headed towards a fatal accident.

What are all the other factors to be considered before looking at the past performance?
Diversify your portfolio...
There is an old saying. Never put all your eggs in one basket. In today's risk management language it is called concentration risk. In fact in banks, concentration risk is considered one of the most important credit risk factors for the bank.

Reserve Bank of India, as a policy measure, have recommended banks to strictly follow exposure norms, i.e., not to lend a borrower or a group of borrower or in a particular industry or business or financial instrument or geographical location beyond a certain percentage of the capital of the bank.
Investors may take an important lesson from this guidance of the Reserve Bank while deciding on the composition of their investment portfolio. To spread the investment in to different segments of business, industry, types of instruments, and then may invest.

Have a judicious mix of equity, debt and precious metal in your portfolio...
If you are less than 40 years, you may have a mix of portfolio, where equity would be say 50%, Debt 30% precious metals and other investment 20%.

As you advance in age the equity portion will reduce and others should increase. In India, the returns on equities in the last 40 years have outstripped far higher compared to all other investment options. But, please remember, return on equity should be always expected in the long run.

Factor in time diversification

Market or business cycles vary from industry to industry, business to business. Also business cycles should be also factored in to for long term.. Longer the time period we take and more businesses or industries we diversify, the peaks and lows of business cycle even out.

Investors would definitely argue, if we only invest in the long run, what about short term fund requirements. For short term investment bank FDs, and income funds are the best instruments. For income funds you may check the duration of the income funds, and match the duration of the income fund with your investment time horizon.

Say if your investment time horizon is 1 year you may choose an income fund with duration of approximately 1 year.

You need to diversify your investments across different time horizons like long term, medium term, short term, and ultra short term.

So that your portfolio will participate in different stock market cycles and interest rate cycles and generate better return by reducing the overall risk.

To neutralise the over dependence on past performance of your stocks/ bonds/ mutual funds, the above options will be helpful to give a good return on your investments while minimsing the associated risks.

The author is Ramalingam K, CFP CM is the Chief Financial Planner at holisticinvestment.in, a leading Financial Planning and Wealth Management company.

Is 'The Bond Rally Of A Lifetime' Finally Over?

When the Fed started talking about reducing its $85 billion monthly purchases of Treasurys and mortgage-backed securities in May, Treasury bonds started to fall (chart 1) and yields jumped (chart 2).

Although Fed officials have vigorously denied that tapering signals an impending rise in interest rates, investors obviously didn't believe the central bankers.

(chart 1)

Many interest rate forecasters shout that the three-decade-long decline in Treasury bond yields is over, and they may be right—finally. These same pundits have been saying so repeatedly ever since rates started down in 1981.

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(chart 2)

As I discussed in my recent book, The Age of Deleveraging, and in many Insights before and since, back in 1981, few agreed with me that serious inflation was unwinding and interest rates would fall. Indeed, the consensus called for rates to remain high or even rise indefinitely.

Yet when 30-year Treasury yields peaked at 15.21% in October of that year, I stated that inflation was on the way out and "we're entering the bond rally of a lifetime." Later, I forecast a drop to a 3% yield. Again, most other forecasters thought I was crazy.

Most investors have a distinct anti-Treasury bond bias, and not just because they fervently believe that serious inflation and leaping yields are inevitable. Stockholders inherently hate them. They say they don't understand Treasury bonds. But their quality has been unquestioned, at least until recently, and their prices rose promptly in 2011 after S&P downgraded them.

Treasurys and the forces that move yields are well-defined—Fed policy and inflation or deflation are among the few important factors.

Stock prices, by contrast, are much more difficult to fathom. They depend on the business cycle, conditions in that particular industry, Congressional legislation, the quality of company management, merger and acquisition possibilities, corporate accounting, company pricing power, new and old product potentials, and myriad other variables.

Stockholders do understand that Treasurys normally rally during weak economic conditions, which are negative for stock prices, so they consider declining Treasury yields to be a bad omen. Brokers also don't want to recommend Treasurys since commissions on them are low, and investors can avoid commissions altogether by buying them directly from the Treasury.

Wall Street denizens also disdain Treasurys, as I learned firsthand while at Merrill Lynch and then White, Weld years ago. Investment bankers didn't want me along on client visits when I was forecasting lower interest rates. They wanted projections of higher rates that would encourage corporate clients to issue bonds immediately, not wait for lower rates and cheaper financing costs. That's what's happening today in anticipation of Fed tightening and higher interest rates—more financing to pay for mergers and acquisitions as well as other needs.

Professional managers of bond funds are a sober bunch who perennially fret about inflation, higher yields, and subsequent losses of principal in their portfolio. But if yields fall, they don't rejoice over bond appreciation but worry about reinvesting their interest coupons and maturing bonds at lower yields.

This disdain for bonds, especially Treasurys, persists despite their vastly superior performance vs. stocks since the early 1980s. Starting then, a 25-year zero-coupon Treasury, rolled into another 25-year annually to maintain the maturity, beat the S&P 500, on a total return basis, by 6.1 times (chart 3), even after the recent substantial bond sell-off.

(chart 3)

This is one of our very favorite charts since we have actually participated in this marvelous Treasury bond rally as forecasters, portfolio managers and investors. And please note that we've never, never, never bought Treasurys for their yield. We couldn't care less what the yield is—as long as it's going down! We want Treasurys for the same reason that most of today's stockholders want equities—appreciation.

How to take right investment decisions at right time?

Whether you are buying an insurance policy or investing in mutual funds, do you take the right investment decisions at the right time.

Whenever you feel low or the time is not in your favor, the first thing that gets affected by this feeling is your decision making process. Factors like wavering social or financial condition, fear of losing money or the regret of investing in the wrong scheme together handicaps the decision making ability of an individual. In fact, this is the situation across the globe.

Many investors are not willing to invest their money in the stock market, accusing the present market condition and wish to wait for a clearer picture.

Whether it is for purchasing a product or investment, individual postpones decisions. This behavior directly or indirectly causes decision palsy in your investing life, as well. In order to avoid this condition in the near future, it is worth reading the below suggestions.

• The market doesn't wait Most investors wait for a perfect market to invest. In reality, there is rarely a perfect time. The market fluctuates every minute and estimating the right time may push you towards a darker area. To find an ideal time, you will have to wait forever.

Also, many investors and market experts cite, "the market is volatile" now. In fact, you will seldom see a still market, fluctuating is its nature. In the anticipation of a right time, you may be missing a golden opportunity. Just like time, even market doesn't wait for anyone.

In the expectation to make more money, you may lose even what you have. Too much thinking may also affect your decision. Therefore, in order to make right investment decisions, you need to take time to think. But you should not take too much time to think. Think over it!

• Invest with a plan It is true that factors like political unrest, economic condition, change in government rules and foreign market regulations impact the market results. But these things are beyond our control, and allowing them to rule our position is like inviting a BIG LOSS.

Although we cannot control these factors, still we can do what is in our hands making investments based upon our unbiased plan and a well thought out asset allocation.  While the investment returns may not be in our hands, the perfect decision making right definitely is.

If you are expecting an amount from a source next month, draft a plan to decide on where (mutual funds, gold, equities etc.) and how much (partly or wholly) you will invest. Don't miss the chance!
 
• Great returns despite economic turmoil This has happened many a times. If you Google the records of global and Indian equity investments of the past thirty years, you will find a surprising element. In most cases these equity asset classes have offered exceptional returns despite economic turmoil. Therefore, it is rightly said one cannot predict the exact market nature.

Therefore, determine the asset allocation. Invest in a staggered manner in the risky asset classes like equity. Rebalance the asset allocation periodically. Don't delay these by any means.

Even you can be the next richest person in the world if you learn to make decisions and dare to follow it. Take your stock market investment decisions based upon the performance record of your favorite shares or equity funds.

Procrastination in taking investment decisions will definitely not make you a successful investor. Work on this habit and overcome it. Delaying your investment decisions is equal to denying your investment returns. Take the right investment decisions at the right time.

The author is Ramalingam K, CFP CM is the Chief Financial Planner at holisticinvestment.in, a leading Financial Planning and Wealth Management company.

LIVE FROM FPA EXPERENCE: Tech integration adds ROI

Financial advisers who integrate technologies will pay more than those who buy separate software solutions, but they stand to gain in annual income as well as future positioning.

"You're going to pay more for integration because you get more," said Cameron Sheehan, director of adviser services for Tamarac AdvisorServices, at the Financial Planning Association's national conference in Orlando on Saturday. "All changes are synchronized among all the systems when they are integrated."

Advisers who integrated technology, or linked their software to communiate with each other, earned an extra 20% in income per adviser, about $181,000 compared to $151,000 for those with standalone systems, Mr. Sheehan said, quoting an April study by Aite Group.

The systems that advisers increasingly are connecting include portfolio accounting, customer relationship management systems and most recently a client portal for investors can see their aggregated accounts, Mr. Sheehan said.

This type of client portal is the industry's answer to clients who want the functionality that some online financial advisers offer, a sort of Mint.com, he said. About 60% to 70% of employees with access to such a client portal log in at least once in the months following its availability.

With integrated technologies, clients can see dynamic reports, not just static performance PDFs that advisers prepare. Clients increasingly want such real time reports.

"Things are moving away from what did I have last month to what do I have now," Mr. Sheehan said.

Full integration and training for these different systems takes about a year, he told advisers at the conference.

Integrating these systems, as well as automating workflow and efficient and electronic document manaagement adds to the annual bottom line and leads to greater value when it becomes time to consider a business sale or other succession plan, said Tim Welsh, founder of Nexus Strategy LLC, at the FPA conference on Sunday morning.

"Look at technology as an investment, as opposed to an expense," Mr. Welsh said.

Automating workflow has been shown to save about 5% on back office costs and document mangement systems can save advisers about 9% in overhead, he said.

'Mad Money' Lightning Round: I Like Target

Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener.

NEW YORK (TheStreet) -- Here's what Jim Cramer had to say about some of the stocks callers offered up during the "Mad Money Lightning Round" Friday evening:

Advanced Micro Devices (AMD): "I think the selling was overdone but people were expecting a blowout quarter and they didn't get one."

Southwest Airlines (LUV): "I still like it. I like US Airways Group (LCC) even more, though." Target (TGT): "I like Target. Retail has been oversold and Target is a good one." Ruth's Chris Steakhouse (RUTH): "I think it works. It's not my fave but I think it works. I think that Yum! Brands (YUM) will come back, too." To read a full recap of "Mad Money" on CNBC, click here. To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here. To watch replays of Cramer's video segments, visit the Mad Money page on CNBC. -- Written by Scott Rutt in Washington, D.C. To email Scott about this article, click here: Scott Rutt Follow Scott on Twitter @ScottRutt or get updates on Facebook, ScottRuttDC

Mark Hurd's Legacy Lives On at Hewlett-Packard

When Hewlett-Packard (NYSE: HPQ  ) parted ways with former CEO Mark Hurd, the scandal-tinged affair left a bad taste in many an investor's mouth. The company and its shareholders took a broom to the boardroom, sweeping out many of the people responsible for HP's strategy in the Hurd era. Only two of HP's directors from that time still serve on the board.

One year later, HP unceremoniously dumped another chief executive who dared to try a bold new strategy -- built on feet of financial clay. Leo Apotheker wanted to take HP in a strongly software-based direction, acquiring British data-management specialist Autonomy in a blockbuster $11 billion deal. The people who hired and fired him, not to mention allowed Apotheker to strike that unfortunate deal, still make up the majority of HP's board. An $8.8 billion writedown of the $11 billion acquisition wasn't enough to bring in another cleaning squad.

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So-called "queen of corporate governance" Nell Minow used HP as a prime example of bad governance, and Foolish star analyst Morgan Housel named names while asking for change. New CEO Meg Whitman isn't changing the troubled company much, leaving HP investors adrift in the rudderless aftermath of the cost-cutting Hurd era. What will it take for investors to grow weary of HP's bumbling strategic advisors?

HP's board is positively youthful by the standards of the Dow Jones Industrial Average (DJINDICES: ^DJI  ) , where the company is a long-standing member. The average HP director is only 56 years old and has served the board for about three years, putting the average starting point smack in the middle of the Hurd scandal. Age doesn't automatically translate into wisdom, but it seems odd that the Dow's most derided board also happens to be on the young side. The lack of long-tenured leadership here is partly a result of the post-Hurd overhaul. But the job wasn't finished when the refreshed board continued to make staggering mistakes.

And now we're back to a strategy that smacks of Hurd-style cost concerns at a time when a strict focus on innovation and bold ideas seems to be in order. Until that happens, you should expect Apple and Google to keep undermining HP's decades-long market dominance. The future is increasingly mobile, flexible, and information-based. That's how Google and Apple can pose such a large threat -- and why Apotheker's software focus may not have been such a bad idea, if he had only paid more attention to the quality of his acquisition targets.

Change starts in the boardroom, folks. I think it's time to sweep out some more of the remnants of HP's darkest hour, allowing the company to truly turn a new leaf.

IBM - Don't Expect Anything Spectacular In The Coming Months

Shares of International Business Machines (IBM) sold off aggressively in after-hours trading. Investors and analysts are not happy that "Big Blue" reported a big miss on its quarterly revenues.

I do not expect anything spectacular in the short to medium term, yet long term prospects should continue to look good as long as the company is taking the rapidly changing developments within the industry seriously, and continues to act upon this.

Third Quarter Results

IBM generated third quarter revenues of $23.72 billion, down 4.1% on the year before. Roughly half of those revenue declines are attributable to adverse foreign currency movements. Consensus estimates for revenues stood at $24.74 billion, implying that IBM missed consensus estimates by a full billion.

The company reported net earnings of $4.04 billion, up 5.7% on the year before. Diluted earnings per share advanced from $3.33 per share last year to $3.68 per share.

Non-GAAP earnings came in at $3.99 per share, beating consensus estimates by three cents as IBM benefited from lower taxes. CEO and Chairman Ginni Rometty commented on the third quarter performance:

In the third-quarter we continued to expand operating margins and increased earnings per share, but fell short on revenue. Where we had identified high growth opportunities and pursued them aggressively --- cloud, mobile, business analytics, and security --- we continued to show strong growth.

Looking Ahead

For the full year of 2013, IBM sees GAAP earnings of at least $15.01 per share. Non-GAAP earnings are seen between $16.25 and $16.90 per share, excluding a workforce rebalancing charge of $1.0 billion.

IBM is taking actions to improve execution in the emerging growth market units and underperforming hardware business. That being said, IBM is confident that it will reach its full year targets and its 2015 goal of achieving operating earnings of at least $20 per share.

Looking Into The Results

IBM saw its revenues! fall by some 4.1%. IBM's main global technology service unit reported a 4.3% fall in revenues, coming in at $9.49 billion. Systems and technology sales fell by 16.6% to $3.25 billion. Only the global business service business and software business reported earnings growth of 0.4% and 0.6%, respectively.

Despite the fall in revenues, IBM managed to boost its gross margins by 60 basis points to 48.0% of total revenues. The company saw very strong reductions in selling, general and administrative expenses which fell by 170 basis points to 22.2% of revenues.

While IBM didn't see a big one-time gain as it did last year, the bottom line was aided by lower provisions for income taxes, which boosted the bottom line.

IBM notes that a portion of these lower tax rates are structural, driven by a decrease in ongoing tax rates. Yet effective tax rates will bounce back a bit, as IBM had discrete benefits from deals with foreign tax audits.

Valuation

IBM ended its third quarter with $10.2 billion in cash, equivalents and marketable securities. Total debt stand at $36.2 billion, for a net debt position of around $26 billion.

Revenues for the first nine months of the year came in at $72.05 billion, down 4.2% on the year before. Net earnings fell by 4.4% to $10.30 billion in the meantime.

At this pace annual revenues could come in around $100 billion, as GAAP earnings could come in around $15-$16 billion.

Factoring in losses of 6% in after-hours trading, with shares trading around $175 per share, the market values IBM at around $192 billion. This values operating assets of the firm around 1.9 times annual revenues and 12-13 times earnings.

IBM pays a quarterly dividend of $0.95 per share, for an annual dividend yield of 2.2%.

Some Historical Perspective

Over the past decade shares of IBM have roughly doubled. As a matter of fact, shares traded as low as $75 in 2006 before they saw steady gains to levels as high as $215 last year. In the meantime, shares h! ave nearl! y sold off some 20%, currently trading around $175 per share.

Between 2009 and 2012, IBM increased its annual revenues by a cumulative 10% to nearly $105 billion last year, although revenues are set to show a decline this year. Net earning rose by nearly 25% from $13.4 billion to $16.6 billion last year. As IBM repurchased nearly one out of five shares outstanding over the time period, earnings per share saw a big extra boost.

Investment Thesis

Investors are not too happy with the drop in revenues. While IBM can partially blame adverse currency movements for the disappointing numbers, hardware weakness and soft emerging market performance hint towards execution issues.

Earnings in the hardware business fell by $1 billion so far this year, driven by dismal performance in China as adverse currency movement cost another $500 million.

Just like all companies operating in the wider industry, IBM is making the transition from focusing on hardware to software, replacing traditional IT infrastructures. Yet IBM still has a long way to go, as the third quarter was the very first quarter in which it generated cloud revenues north of $1 billion. Service sector could not offset falling hardware revenues as well, even as the service backlog continued to grow as IBM saw poor conversion into current revenues.

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While IBM continues to hold on to its full year targets, analysts and the wider investment community are not happy, especially with the poor revenue developments. Yet IBM has done a great job at cutting costs to boost margins, while continued share repurchases continued to fuel earnings per share growth.

Over the past decade IBM has done well. It saw modest revenue growth, but coupled this with margin expansion and share repurchases, resulting in solid but spectacular earnings growth.

Today, the environment for IBM looks more challenging as more a! nd more i! nvestors and analysts are questioning Big Blue's ability to reach its $20 earnings per share by 2015. This is as revenues are actually falling, or stabilizing at best. The ability to squeeze out higher margins going forward will be difficult, while IBM has already picked up quite some debt to finance share repurchases.

While IBM was quick to exit consumer electronics, the solid and profitable business market is coming under pressure by cloud developments. With a potential painful shift to the cloud coming up in the coming years, IBM is not that well positioned at the moment, while shares are trading at historical high levels.

Back in June of this year, I last took a look at IBM's prospects after it paid $2 billion to acquire SoftLayer to boost its cloud computing offerings. The deal is just a drop in the bucket for a firm the size of IBM which targets $7 billion in cloud revenues by 2015, currently generating revenues at an annual rate just north of $4 billion. Note that even when IBM meets its 2015 target, cloud revenues make up just 7% of total revenues.

Back in June when shares were trading around $205 per share, I concluded that investors should not expect spectacular returns in the short to medium term, when in fact shares have lost some 10% ever since.

I applauded IBM's ability to constantly change in an evolving environment to stay competitive in the future. This will undoubtedly occur again given that IBM takes the Cloud seriously.

Trading around 12 times current earnings and 9-10 earnings for 2015, IBM still looks safe as the company should be able to overcome these hurdles. I do think prospects for short to medium returns look bleak given the current sentiment, yet the long term still looks good based on the valuation.

On top of that shareholders receive large cash flows consisting out of a 2.2% dividend yield, and repurchases of up to 5% per annum, for a combined yield of around 7%.

I remain on the sidelines for now, but still seeing long-term potenti! al on the! back of an attractive valuation, as long as the company keeps evolving.

Source: IBM - Don't Expect Anything Spectacular In The Coming Months

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)

Top Penny Stocks To Watch For 2014

Environmental solutions provider Heckmann (NYSE: NES  ) is set to report earnings on May 8. This could very well be the company's last report under the Heckmann name, as the company is planning to transform its brand into Nuverra Environmental Solutions pending a shareholder vote. While the name might be changing, the business of providing a full-cycle water solution to oil and gas producers is still in its early stages of growth. With that as a context, let's take a look at what to expect from the company this quarter.

Inside the numbers
Analysts expect Heckmann to lose a penny a share in the quarter on revenue of $166.9 million. While that would represent positive momentum from the $0.03 loss in the year-ago quarter it would be taking a step back from the surprise gain the company reported last quarter. While hitting these numbers will be important to keep shares from slipping, forward guidance and future growth are what investors really need to watch.

Updates on its growth plan
Heckmann made a big splash last year by merging with Power Fuels to gain access to the Bakken. Not only did the deal expand the company's footprint to cover nearly all the major shale plays, but it enabled founder Richard Heckmann to transition out of the CEO role and focus his attention on growing the business. It will be important to see what the company plans on doing next as it continues to expand its business. The company has a bold goal to deliver a billion dollars in annual revenue and its Richard Heckmann's job to deliver on that promise.

Top Penny Stocks To Watch For 2014: Theravance Inc.(THRX)

Theravance, Inc., a biopharmaceutical company, engages in the discovery, development, and commercialization of small molecule medicines for various therapeutic areas, including respiratory disease, bacterial infections, and central nervous system (CNS)/pain. The company?s key development programs with GlaxoSmithKline (GSK) include the RELOVAIR, a Phase 3 clinical trial program for the treatment of patients with chronic obstructive pulmonary disease (COPD) and/or asthma; the LAMA/LABA program, a Phase 3 COPD program; and the Bifunctional Muscarinic Antagonist-beta2 Agonist (MABA) program, a Phase 2b program for the treatment of COPD, as well as Peripherally Selective Mu-Opioid Receptor Antagonist (P Advisors' Opinion:

• [By Sean Williams]

  Perhaps the most exciting new treatment to hit the market in years was recently approved by the FDA. Developed by GlaxoSmithKline (NYSE: GSK  ) and Theravance (NASDAQ: THRX  ) , Breo Ellipta is a dry powder drug delivered by inhaler and meant to provide long-term relief of air-flow obstruction and reduce COPD exacerbations. The two companies are collaborating on a handful of potentially revolutionary new COPD treatments that combine Theravance's long-acting beta-2 agonists with Glaxo's long-acting muscarinic antagonists. Its next treatment, Breo Anoro, is currently under review by the FDA.

• [By Sean Williams]

  On the bright side, GlaxoSmithKline (NYSE: GSK  ) and Theravance (NASDAQ: THRX  ) received a much-expected drug approval for once-daily inhaled COPD maintenance treatment Breo Ellipta from the Food and Drug Administration. Having proved non-inferior to the placebo in trials, and delivering a favorable safety profile while reducing flare-ups and helping relieve air flow obstruction, Breo Ellipta has a good shot at being a blockbuster drug within the next couple of years. Breo Ellipta is expected to be available to patients next quarter. In addition, as I've alluded to on numerous occasions, it could be the impetus that encourages Glaxo to gobble up Theravance's Royalty Management -- one of two proposed entities that Theravance plans to split into. This is certainly a big win for both companies.

• [By Brian Pacampara]

  What: Shares of biopharmaceutical company Theravance (NASDAQ: THRX  ) climbed as high as 13% today after announcing plans to split into two companies, separating its drugs under development with GlaxoSmithKline from its other operations.

• [By Sean Williams]

  What: Shares of Theravance (NASDAQ: THRX  ) , a biopharmaceutical company that focuses on central nervous system and respiratory disorders, leapt as much as 19% -- its second double-digit jump this week -- following a positive recommendation from the Food and Drug Administration's panel regarding COPD drug Breo Ellipta.

Top Penny Stocks To Watch For 2014: U.S. Global Investors Inc.(GROW)

U.S. Global Investors, Inc. is a publicly owned investment manager. The firm primarily provides its services to investment companies. It also provides its services to pooled investment vehicles. The firm manages mutual funds for its clients. It invests in the public equity and fixed income markets across the globe. The firm invests in value stocks to make its equity investments. It employs a fundamental and technical analysis with bottom-up and top-down analysis to make its investments. The firm typically invests in companies specializing in gold and natural resources. U.S. Global Investors, Inc. was founded in 1968 and is based in San Antonio, Texas.

Advisors' Opinion:

• [By Morgan Myrmo]

  One business that is ripe for takeover is U.S. Global Investors (GROW), a micro-cap asset manager based in San Antonio, Texas. The company specializes in the management of gold, mineral, resource and high-growth emerging market mutual funds. U.S. Global fund values have been hammered over the last five years as the current economic recovery has yet to reach commodities and emerging markets.

10 Best Insurance Stocks To Watch For 2014: Medallion Financial Corp.(TAXI)

Medallion Financial Corp., through its subsidiaries, operates as a specialty finance company in the United States. The company engages in originating, acquiring, and servicing loans that finance taxicab medallions and various types of commercial businesses. It offers commercial loans to finance the purchase of the equipment and related assets necessary to open a new business, or the purchase or improvement of an existing business; asset-based loans to small businesses; and secured mezzanine loans to businesses in various industries, including manufacturing and various service providers. The company also raises deposits; originates consumer loans for the purchase of recreational vehicles, boats, motorcycles, trailers, and hearing aids; and conducts other banking activities. In addition, it provides other debt, mezzanine, and equity investment capital to companies in various industries. The company was founded in 1995 and is headquartered in New York, New York.

Top Penny Stocks To Watch For 2014: Penson Worldwide Inc.(PNSN)

Penson Worldwide, Inc., through its subsidiaries, provides various critical securities and futures processing infrastructure products and services to the financial services industry. Its products and services include securities and futures clearing and execution, clearing and custody services, trade settlement, technology services, risk management services, and customer account processing and customized data processing services, as well as financing and cash management technology and other related products. The company also participates in margin lending, securities borrowing, and lending transactions, primarily to facilitate clearing and financing activities, as well as provides tools and services to support trading in multiple markets, asset classes, and currencies. In addition, it offers Internet account portfolio information, holding and safeguarding securities and cash deposits, securities lending and borrowing, proprietary trading, futures products, and institutional and active retail front-end trading software products and services, as well as technology and data product offerings, including customizable front-end trading platforms, options and futures trade data, and order-management services. It serves online, direct access, and traditional retail brokers, as well as banks, institutional brokers, financial technology companies, and securities exchanges in the United States, Canada, Europe, and Asia. The company?s securities and futures processing infrastructure products and services are marketed principally under the Penson name. Penson Worldwide, Inc. was founded in 1995 and is headquartered in Dallas, Texas.

Top Penny Stocks To Watch For 2014: Overhill Farms Inc.(OFI)

Overhill Farms, Inc. manufactures prepared frozen food products for branded retail, private label, foodservice, and airline customers. Its product line includes entrees, plated meals, bulk-packed meal components, pastas, soups, sauces, poultry, meat and fish specialties, and organic and vegetarian offerings. The company markets its products through its internal sales force, as well as through outside food brokers. Overhill Farms, Inc. was founded in 1968 and is headquartered in Vernon, California.

Top Penny Stocks To Watch For 2014: Rowan Companies Inc.(RDC)

Rowan Companies, Inc. provides onshore and offshore oil and gas contract drilling services in the United States and internationally. The company offers its contract drilling services through its fleet of 28 self-elevating mobile offshore drilling platforms and 30 deep-well land drilling rigs. The company was founded in 1923 and is headquartered in Houston, Texas.

Advisors' Opinion:

• [By Dimitra DeFotis]

  Among energy stocks rising today: Producers of gas and gas liquids were higherm, including Devon (DVN) and�Consol Energy (CNX) rose about 2% each, while drillers�Nabors Industries (NBR) and�Rowan Companies (RDC) jumped more than 3% apiece. Oilfield services names Halliburton (HAL) and Baker Hughes (BHI) each rose nearly 2%.

Top Penny Stocks To Watch For 2014: Pizza Inn Inc.(PZZI)

Pizza Inn, Inc., together with its subsidiaries, operates and franchises pizza buffet, delivery/carry-out, and express restaurants in the United States and internationally. Its buffet restaurants offer dine-in, carryout, and catering services, as well as delivery services. The company?s delivery/carryout restaurants provide delivery and carryout services and are located in shopping centers or other in-line retail developments. Its express restaurants serve its customers through various non-traditional points of sale and are located in convenience stores, food courts, college campuses, airport terminals, athletic facilities, or other commercial facilities. The company operates restaurants under Pizza Inn trademark. As of July 1, 2011, it owned and operated 5 restaurants; and franchised approximately 300 restaurants. Pizza Inn, Inc. was founded in 1958 and is based in The Colony, Texas.

Top Penny Stocks To Watch For 2014: UMH Properties Inc.(UMH)

UMH Properties, Inc. (UMH) is a real estate investment trust. The firm engages in the ownership and operation of manufactured home communities. It leases manufactured home spaces to private manufactured home owners, as well as leases homes to residents. The firm invests in the real estate markets of New York, New Jersey, Pennsylvania, Ohio, and Tennessee. In addition, it invests in debt and equity securities of REITs. United Mobile Homes was incorporated in 1968. The company was formerly known as United Mobile Homes, Inc. UMH Properties is based in Freehold, New Jersey.

JC Penney Hits 30-Year Low; JPMorgan Sees Long-Term Viability Trumping Short-Term Share Price

There was good news and bad news for JC Penney (JCP) investors in JPMorgan’s report on the beleaguered retailer today.

REUTERS

The good news is that management is making the tough decisions necessary to ensure that the JC Penney can turn itself around. The bad news is that a turnaround will take time–lots of time.

Analysts Matthew Boss, Anne McCormick and Esteban Gomez explain:

We left Dallas incrementally positive in management's decision making process, noting a clear mindset shift toward long-term viability…rather than near-term stock price….Re-focused on the core ("don’t try to be something you are not" mantra), management is working to correct missteps of the past (private label reorganization, Home realignment, shops structure). Looking ahead, the top-line ($4B recapture: $2B = home, .com, private brands / $2B = lost customer base) and gross margin (return to 38-39% = 450bps: return to 15% clearance mix + 350bps: private brands to 50%) algorithms remain the carrot on paper, but we left HQ without a clear sense of timing around a top-line inflection (customer connection impaired with traffic driving Home a work in progress), which remains key to the turnaround.

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While JC Penney’s recent stock offering helped with liquidity, it could still be an issue, Boss, McCormick and Gomez say. They write:

While management believes current liquidity remained adequate though year-end, the $810M equity raise (9/27) provides a backbone for appropriate longer term decisions with guidance for total liquidity of $2.0B+ at year-end (ex greenshoe). Specifically, initial internal planning discussions around holiday 2014 were being impacted by short-term liquidity concerns (impacting buys / staffing decisions), with the equity injection providing flexibility through 2H15 if fundamentals do not inflect next year. That said, the treasure chest is far from infinite with management speaking to potential restructuring in 1H14 (if needed and not in the planning process today) to include the closing of cash flow negative stores (while four-wall profitable today) as an option…

Shares of JC Penney have dropped 8.1% to $7.23 at 12:07 p.m. today, the lowest price since 1982. Macy's (M) is little changed at $42.57, Sears (SHLD) has gained d0.9% to $55.23, Kohl’s (KSS) has ticked down 0.1% to $51.43.

 

BlackBerry (BBRY) Seeks to Clam Investors and Customers

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NEW YORK (TheStreet) -- BlackBerry (BBRY) is seeking to reassure investors and customers in an open letter to be published by 30 media organizations worldwide on Tuesday. The one-page open letter advertisement will appear in both print and online publications, including Washington Post, The Wall Street Journal and The Globe and Mail.

"We have one important message for you: You can continue to count on BlackBerry," BlackBerry writes, highlighting its cash assets, lack of debt and commitment to cut costs by 50% as reasons for its secure future.

BlackBerry's outreach follows a tumultuous period for the smartphone maker as news of bids and breakups continue to shake up its share price.

BlackBerry is currently evaluating offers to purchase the company whole or piecemeal. On Friday, reports that founder and former co-CEO Mike Lazaridis was considering a potential takeover bid surfaced, an offer which would compete with a $4.7 billion bid a Fairfax Financial Holdings-led consortium proposed in September. Though BlackBerry has signed a letter of intent with Fairfax, pending six weeks' due diligence whereby it can solicit alternative offers, many have expressed doubts over the deal since it relies on additional cash from non-Fairfax investors. Private equity group Cerebus Capital Management is determining whether it will offer a bid after seeking a confidentiality agreement to evaluate all BlackBerry's financial information. BlackBerry shares closed 0.87% higher to $8.14, leading the S&P 500 which is up 0.41%. TheStreet Ratings team rates BlackBerry Ltd as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation: "We rate BlackBerry Ltd (BBRY) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and weak operating cash flow." Highlights from the analysis by TheStreet Ratings Team goes as follows: BlackBerry Ltd has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, BlackBerry Ltd swung to a loss, reporting -$1.20 a share vs. $2.24 a share in the prior year. The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Communications Equipment industry. The net income has significantly decreased by 310.6% when compared to the same quarter one year ago, falling from -$235 million to -$965 million. The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Communications Equipment industry and the overall market, BlackBerry's return on equity significantly trails that of both the industry average and the S&P 500. Net operating cash flow has significantly decreased to -$144 million or 133.96% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower. The revenue fell significantly faster than the industry average of 29.6%. Since the same quarter one year prior, revenues fell by 45%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share. You can view the full analysis from the report here: BBRY Ratings Report Written by Keris Alison Lahiff.

Ares Capital Names New CEO

Ares Capital (NASDAQ: ARCC  ) now has a new man in the chief executive's office. The business development company has tapped Michael Arougheti to be its CEO, in addition to a raft of other high-level appointments.

Before his appointment, Arougheti was president of the company, dating to its IPO in 2004. He is also a director at the company, and a senior partner in the private debt group of affiliated entity Ares Management. He will continue to serve in the latter capacity after his move to Ares Capital's CEO office.

To fill his vacated president job, Ares has given the nod to R. Kipp deVeer II. Like Arougheti, deVeer will continue in his position as senior partner in the private debt group of Ares Management. 

Meanwhile, Eric Beckman, Mitchell Goldstein, and Michael Smith have all been named executive vice presidents at Ares Capital. Not surprisingly, the three men have served as senior partners in the private debt group of Ares Management and will continue to do so.

[video] Quick Take: New iPad Expected on Oct. 22

NEW YORK (TheStreet) -- Apple (AAPL) has an event scheduled for Oct. 22, and Mark Gurman, senior editor at 9to5Mac tells TheStreet's Brittany Umar to expect new iPads.

It's been about a year since Apple refreshed the iPad, and Gurman said he expects changes but nothing overwhelming.

For the full-sized iPad, he said it'll likely be thinner and lighter, while the iPad Mini will be faster and -- he hopes -- come with the high-resolution Retina Display.

The timing of the event is interesting. Nokia (NOK) has an event scheduled for that day, and it's also the first day Microsoft's (MSFT) Surface 2 tablet goes on sale. Gurman said that it's not surprising Apple is doing a product refresh now, because it fits the company's usual pattern. He said the timing is merely a coincidence -- and a convenient one at that. He said that while the Surface 2 will fill some niche pockets of the tablet market, it's not a huge seller. The iPad refresh should be a good move ahead of the holiday season, however, he said. Apple is also expected to reveal more information regarding the next Mac operating system and perhaps the new Mac Pro desktop computer, Gurman concluded. -- Written by Bret Kenwell in Petoskey, Mich. Follow @BretKenwell

PCAOB Toughens BD Audit Standards

The Public Company Accounting Oversight Board adopted Thursday a bunch of new audit requirements for broker-dealers.

PCAOB adopted two attestation standards pertaining to audits of BDs designed to help protect customer funds by enhancing the quality of compliance information provided to the Securities and Exchange Commission and used in its regulatory oversight of broker-dealers.

The Board also adopted an auditing standard applicable when auditors are engaged to perform audit procedures and report on supplemental information that broker-dealers and others file with the SEC. Finally, the Board adopted related amendments to other PCAOB standards.

The Dodd-Frank Act amended the Sarbanes-Oxley Act to, among other things, authorize the PCAOB to oversee the audits of brokers and dealers registered with the SEC.

“The standards adopted today are an important step for the Board's oversight of audits of broker-dealers authorized under the Dodd-Frank Act. They will strengthen procedures for auditors and improve the reliability of annual reports required by the SEC for oversight of customer assets held by broker-dealers,” said PCAOB Chairman James Doty, in a statement.

As the PCAOB explains, the two attestation standards cover the auditor’s examination of compliance reports and the auditor’s review of exemption reports.

The requirements for BDs to prepare compliance or exemption reports, and for PCAOB-registered auditors to examine or review such reports, are new requirements included in the SEC’s recent amendments to Exchange Act Rule 17a-5. The compliance and exemption reports contain statements made by BDs regarding compliance with key SEC financial responsibility rules, including those involving the safekeeping of customer assets or with applicable conditions for exemption.

“Consistent with the requirements of Rule 17a-5, the attestation standards establish requirements for auditors examining certain statements in broker-dealer compliance reports and reviewing statements in broker-dealer exemption reports,” PCAOB said.

The supplemental information standard establishes the auditor’s responsibilities when engaged to perform audit procedures and report on supplemental information that accompanies the audited financial statements. Supplemental information includes the supporting schedules that broker-dealers are required to file with the SEC.

The Board initially proposed the attestation standards and auditing standard for supplemental information on July 12, 2011. The Board adopted these standards after consideration of comments received on the proposal and as a result of amendments made to Rule 17a-5 that were adopted by the SEC on July 30, 2013.

“Both attestation standards emphasize coordination between the examination or review engagement, the audit of the broker-dealer’s financial statements and audit procedures performed on the supplemental information,” said Martin F. Baumann, PCAOB Chief Auditor and Director of Professional Standards, in the same statement.

“This emphasis on coordination can promote overall audit effectiveness and avoid redundancy in the work performed.”

Turning RMD Pain into Gain

A fiscal pain for many retired Americans are required minimum distributions from traditional IRAs and other qualified retirement plans. Calculating the distributions and withdrawing the money are chores. People worry about making a mistake that will trigger the 50% penalty. The problems are likely to get worse in coming years as Congress grabs for more revenue.

The tax code requires you to begin distributions after age 70½, whether you need the cash or not. Each year as you get older, the RMD schedule increases the percentage of the IRA that must be distributed. That’s fine when your spending needs equal or exceed the RMDs. But many people have multiple sources of income and large IRAs. They don’t need all of the forced distributions. The distributions increase income taxes and can push you into a higher income bracket that triggers higher Medicare premiums and other problems. Many people simply want to let their IRAs accumulate so they can serve as emergency spending accounts or legacies for their heirs.

Already several proposals to make this worse are floating through Washington. The proposal receiving the most attention would curtail the “stretch IRA” that allows your non-spousal beneficiaries to draw down an inherited IRA gradually over their life expectancies and require the IRA to be distributed and taxed within five years.

In the past I’ve recommended several solutions that deal with an IRA that’s “too big” or to prevent the forced distribution problem long before it starts.

For example, anytime after age 59½ you can draw down the IRA early, either in a lump sum or gradually over time. Pay the taxes early and have the balance invested in a taxable account where it qualifies for tax advantages such as the 20% top rate on long-term capital gains and qualified dividends. Also, when your heirs inherit, they aren’t forced to liquidate the assets and can increase the tax basis to its current fair market value, avoiding taxes on all the appreciation during your lifetime.

A related strategy is to convert the traditional IRA to a Roth IRA. Again, you pay income taxes on the conversion. Once the money is in the Roth IRA, however, the income and gains will compound tax free and future distributions will be tax free to you and your heirs. You won’t have to worry about RMDs, and your heirs under current law can take RMDs over their life expectancies.

Many people object to paying taxes before they have to, so they don’t want to draw down their IRAs early or convert to a Roth IRA. For those people and for those who want to use their IRAs to generate more wealth for their heirs, I’ve found strategies that can turn your RMDs into assets and leverage them into substantial wealth for your families.

Let’s look at two examples. Before we dive into the examples, remember the annual gift tax exclusion. In 2013 you can give anyone up to $14,000 free of gift taxes, and a married couple can give jointly $28,000. The amount is indexed for inflation. A married couple with three children can give a total of $84,000 annually ($28,000 each) to their children gift-tax free each year. The gifts are tax free whether given directly or transferred to an irrevocable trust. We’ll use this tool in these strategies.

The first option we call the Wealth Creation RMD Leverage Strategy.

Let’s say Max and Rosie Profits are each age 75 and in good health for their ages. Max has a $500,000 IRA. He doesn’t need to draw down the IRA for living expenses because of his other income sources. His RMD this year will be $21,834. The Profits have two adult children and three grandchildren ages 11, 13, and 15. The adult children are doing fine, so the Profits primarily would like to provide for their grandchildren. They don’t want to make traditional annual lump sum gifts. Instead, they want to leverage the gifts.

To leverage the RMDs, the Profits create what estate planners call an Irrevocable Dynasty Trust. Each year the Profits contribute an amount equal to this year’s RMD to the trust. The trustee (who is usually an adult child) acquires a joint & survivor life insurance policy (JLS) on the lives of both Profits and uses the annual contributions to pay the premiums and other trust expenses. At the Profits’ age and health, the RMD amount of $21,834 would create a JLS policy with a face value of $931,212. 

After both the Profits pass away, the trustee will receive the policy’s face value of $931,212 from the insurer. These benefits will be tax free to the trust, and the trustee will distribute them tax free to the grandchildren under terms set by the Profits in the trust agreement, which can provide a financial head start or boost for the grandchildren. If the second spouse passes away after 20 years (at age 95), the Profits would have deposited $436,680 of the RMD  ($21,834 x 20 = $436,680) to generate the $931,212 in benefits for their grandchildren. That’s a 2.13 to 1 return. Compare the results with drawing down the IRA over those 20 years and investing it in traditional investments. Of course, if the surviving spouse passes sooner, the return is even higher.

Keep in mind that this isn’t one of those complicated life insurance policies in which the premiums and face value of the policy change based on fluctuations in the stock market or other factors. The face value of the policy is fixed when the policy is acquired by the trust, and it and the premiums will be the same regardless of whether the Profits live for one year or 30 years and what the markets do.

Also, while at least one of the Profits is alive and paying premiums from the IRA distributions, the policy will generate a cash accumulation account that can be borrowed against or used to pay future premiums by the trustee. After 10 years this account is estimated to be $118,801, and it should be $280,431 after 20 years. This is not an addition to the policy’s face value.

The second option for the Profits is the Family Bank RMD Leverage Strategy. This strategy is very similar but uses a slightly different type of insurance policy that has a lower face value or life insurance benefit but should create a larger cash accumulation account. In the Max and Rosie Profits example, the life insurance benefits would be $834,853. The cash value account is estimated to be $204,398 after 10 years and $471,979 after 20 years, assuming the current earnings rate of 5.2%.

The reasons to use the Family Bank Strategy are the cash value account is more readily available and still is both tax-free and cost-free. Policy terms vary, but with the right JLS policy, loans are cost-free or very close to it. The grandchildren or other heirs don’t need to wait for the Profits to both pass away to have ready access to the cash value account. The trustee can tap the account to pay for family emergencies, education, business or investment opportunities, or for other expenses. These expenditures will reduce the eventual policy benefits if the loans aren’t repaid, but they are available without a real cost to the family.

While I used a married couple in these examples, the strategies also are effective for unmarried people.

When comparing all the strategies, you’ll find that while the Profits are alive, maintaining the current IRA or converting it to a Roth IRA would have a higher liquid asset balance than either the Wealth Creation RMD Leverage or Family Bank RMD Leveraged Strategies. The Family Bank RMD Leveraged Strategy would have a substantially higher lifetime cash account value than the Wealth Creation RMD Leverage Strategy. In the long term both RMD leveraged strategies generate much higher final values for the heirs. The Wealth Creation RMD Leverage Strategy generates more long-term value than the Family Bank strategy.

Choosing either of the life insurance strategies immediately increases the value of the Profits’ estate, because the policy face value is far higher than the value of the IRA. It would take decades of high returns for an IRA to equal the value of the life insurance benefits. Plus, the IRA distributions would be taxed as ordinary income to the grandchildren, while the insurance benefits would be tax free. There’s also the free value of the cash account. Also, if your estate might be taxable at either the federal or state level (or both), consider that an IRA would be taxed while the dynasty trust would avoid the estate and inheritance taxes.

IRA owners who don’t expect to need their full balances and want to turn RMDs from a nuisance to an asset should consider using RMDs to purchase the right kind of life insurance. Leveraging the value of the IRA, significantly increases what will be available to your heirs tax free, regardless of what the markets do.

_________

There aren’t many specialists in the country who can effectively implement these strategies. Estate Planning Specialists, a firm founded in 1988 by David T. Phillips, is one and published a White Paper on them.  They can also prepare a personalized illustration for you based on your individual circumstances. David recently updated his book, The 10 Most Common Estate Planning Mistakes and How to Avoid Them, available on Amazon.com for $14.95. I made special arrangements with David for my readers to receive all three for $10.95:

* The IRA Required Minimum Distribution Leveraged Strategy White Paper;

* A personalized illustration on the strategies; and

* The recently updated book, The 10 Most Common Estate Planning Mistakes and how to Avoid Them.

Call their toll free number 1-888-892-1102 and mention you heard about it from me.

J.C. Penney Company, Inc. (JCP): Can JCPenney Sustain Investor Confidence?

Troubled retailer J.C. Penney Company, Inc. (NYSE:JCP) has provided some relief to its investors by saying it saw improved sales trends in September and expects this to continue throughout the remainder of the year. Further, the company expects to end the year with more than $2 billion in cash, sending the stock higher by 7 percent.

The vital question is can JCPenney continue in the same vein and sustain investor confidence amid a tough retail climate and government shutdown.

First things first; the recent equity raise should dilute the fiscal 2014 EPS by about 50 cents. Last week, JCPenney closed a public offering of 84 million shares of common stock that generated approximately $785 million in net cash proceeds.

It may need to raise further cash next year to boost the liquidity, and the skeptics remain concerned about the slower-than-expected recovery in JCPenney's key operational metrics including same store sales, gross margins and cash flow.

Sterne Agee analyst Charles Grom echoed similar thoughts in his client note saying that former CEO Ron Johnson may have permanently turned off the retailer's core customer. Groms downgraded the stock to "hold" from "buy."

The company ended the second quarter with cash and cash equivalents of $1.53 billion and $1.4 billion in untapped liquidity on its revolving line of credit, including the accordion feature.

A series of internal missteps left JCPenney in a more challenged spot near term. Former CEO Ron Johnson's tactics of removing discounts and overhaul the chain's inventory resulted in a $1 billion loss and a 20 percent plus drop in sales in his first full year on the job. No wonder, he was ousted after 17 months..

Now, Myron Ullman, the current Chief Executive Officer of JCPenney, said, reconnecting with its customers and getting them into stores is a top priority for the company.

Gross margins continue to be impacted by lower clearance margins due to the overhang of inventory from the first two quarters of t! he year, higher levels of clearance units sold during the period, as well as the company's transition back to a promotional pricing strategy during the second quarter of 2013.

At the current level of expenses, the company's gross margin dollars are not enough to cover its expenses, and in order for the company to escape from its seemingly ongoing losses, it will have to rebound its sales to a level that will expense leverage.

Though traffic trends have improved during the quarter, including positive off-mall traffic for the last two weeks of September, the company's mall-based stores continues to be difficult.

JCPenney is still trying to fix its Home department as the company admitted that getting the new Home strategy up and running has been more challenging than originally planned. To date, the company has re-opened all but a handful of its 505 new Home departments.

Merchandise assortment, shopping environment and price points have not resonated with customers, and sales trends remain weaker in stores. Importantly, hard home goods is an inventory category that takes a lot of time to clear—even with aggressive couponing—which could create a margin overhang for several more quarters.

JCPenney is working hard to create a more balanced assortment between modern and traditional home furnishings, with opening price points and an easy shopping environment.

The company is pursuing a number of strategic initiatives in order to continue driving improved performance. With its renewed focus on putting the customer first, JCPenney is rebuilding its base of highly satisfied and loyal customers. Customer service scores are at all-time highs for the company.

Private brands and basics are an integral - and profitable - part of the company's strategy. Private brands, such as St. John's Bay, Arizona and Stafford, and key item basics have been restored to inventory levels sufficient to meet customer demand heading into the critical Holiday season.

One of the key positiv! es in the! company's statement is that remains current in its payments to vendors. This indicates that the company is continuing to make progress in its turnaround.

September comparable store sales, a key metric to gauge retail performance, were down 4 percent from last year but rose 580 basis points from August 2013.

The company's online sales continue to trend double digits ahead of last year, and are up 18.6 percent in the third quarter to date. September sales on jcp.com experienced 25.3 percent sales growth over the same period last year. Women's apparel, the company's largest business, reported positive sales for the month of September.

JCPenney should post improved sales numbers for the key holiday season and report strong margins and cash flow to sustain the confidence of the investors; although, it is not easy amid tough competition and  weak retail environment.

"Although there remains significant work to be done, the experience, talent and drive of our team is allowing us to confront our challenges head on and take swift and effective actions to address them. It will take time, but we are on the right path with a sound strategy and achievable goals," Ullman said.

Top 5 Heal Care Stocks To Buy Right Now

LONDON -- There are things to love and loathe about most companies. Today, I'm going to tell you about three things to loathe about U.S. tech titan�Apple� (NASDAQ: AAPL  ) .

I'll also be asking whether these negative factors make Apple a poor investment today.

DNA
"Innovation is in the company's DNA." Apple is the company to which this cliche is most frequently applied. It's a comforting idea for fans of Apple to believe that innovation is hard-wired into the business and that it will always continue to innovate, as if that's its biological destiny.

The idea is rubbish, of course: Nurture, not nature is responsible for innovation. And the environment within a business that nurtures innovation can easily change for the worse.

In its heyday, ICI was a top-three global company and one of the greatest innovators around, creating polythene, perspex, and Paludrine (the first really effective synthetic treatment against malaria), among a host of game-changing products. Innovation was in ICI's DNA -- except one day it wasn't, and the business went into decline.

Top 5 Heal Care Stocks To Buy Right Now: Scripps Networks Interactive Inc(SNI)

Scripps Networks Interactive, Inc. operates as a lifestyle content company in the United States and internationally. It engages in the operation of television networks, including Home and Garden Television, Food Network, Travel Channel, DIY Network, Cooking Channel, and Great American Country. The company also operates Websites, including FoodNetwork.com, Food.com, CookingChannelTV.com, HGTV.com, DIYnetwork.com, and Travelchannel.com that are associated with its television networks and other Internet-based businesses serving food, home, and travel related categories. Scripps Networks Interactive, Inc. is headquartered in Knoxville, Tennessee.

Advisors' Opinion:

• [By Tim Beyers]

  You probably don't know Ken Lowe. Why should you? He's the CEO of Scripps Network Interactive (NYSE: SNI  ) , a five-year-old entertainment holding company that tends to keep clear of controversy. Or at least it used to.

Top 5 Heal Care Stocks To Buy Right Now: UTi Worldwide Inc.(UTIW)

UTi Worldwide Inc., through its subsidiaries, operates as a supply chain services and solutions company worldwide. Its supply chain planning and optimization services help its clients in designing and implementing solutions for their supply chains. The company operates in two segments, Freight Forwarding, and Contract Logistics and Distribution. The Freight Forwarding segment offers air and ocean freight forwarding, customs brokerage, and other related services. This segment operates as an indirect carrier for its clients or as an authorized agent for airlines and ocean carriers by providing pick-up and delivery service between the carrier and the location of the shipper or recipient. Its customs brokerage services include preparing and filing formal documentation required for clearance through customs agencies, obtaining customs bonds, facilitating payment of import duties on behalf of the importer, arranging for payment of collect freight charges, assisting with determin ing and obtaining the commodity classifications for shipments, and performing other related services. The Contract Logistics and Distribution segment offers various services, which comprise receiving, deconsolidation and decontainerization, sorting, put away, consolidation, assembly, cargo loading and unloading, assembly of freight and protective packaging, warehousing, order management, and customized distribution and inventory management services, as well as outsourced services, such as inspection services, quality centers, and manufacturing support. This segment also provides various distribution, consultation, outsourced management services, planning and optimization services, coordination of purchase orders, and customized management services. The company serves various industries, such as pharmaceutical, retail, apparel, chemical, automotive, high technology, and electronics industries. The company was founded in 1986 and is headquartered in Road Town, the British Virg in Islands.

10 Best Warren Buffett Stocks To Own For 2014: Sahara Energy Ltd (SAH.V)

Sahara Energy Ltd., a junior resource exploration company, engages in the acquisition, exploration, and development of petroleum and natural gas reserves in western Canada. It focuses on the exploration and evaluation of various oil and gas properties in Saskatchewan and Alberta. The company is headquartered in Calgary, Canada. On March 23, 2010, Sahara Energy, Ltd. filed for bankruptcy under the Bankruptcy and Insolvency Act (Canada).

Top 5 Heal Care Stocks To Buy Right Now: Endologix Inc(ELGX)

Endologix, Inc. develops, manufactures, markets, and sells medical devices for the treatment of aortic disorders. It offers the ELG System, a stent graft and delivery system for the treatment of abdominal aortic aneurysms through minimally-invasive endovascular repair. The company also provides aortic extensions and limb extensions, which attach to the main body of ELG Device, enabling physicians to customize it to fit the patient?s anatomy. In addition, it offers accessories, such as guidewires, snares, and catheter introducer sheaths that facilitate the optimal delivery of its ELG Device. Endologix, Inc. sells its products through direct sales force and independent distributors in the United States, Europe, Asia, South America, and Mexico. The company was formerly known as Radiance Medical Systems, Inc. and changed its name to Endologix, Inc. in May 2002. Endologix, Inc. was founded in 1992 and is headquartered in Irvine, California.

Advisors' Opinion:

• [By Seth Jayson]

  Calling all cash flows
  When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Endologix (Nasdaq: ELGX  ) , whose recent revenue and earnings are plotted below.

Top 5 Heal Care Stocks To Buy Right Now: Amcom Telecommunications Ltd (AMM.AX)

Amcom Telecommunications Limited operates as an information technology (IT) and telecommunications company in Australia. The company offers data and network solutions, including Internet and Ethernet services, fiber-optic point-to-point connectivity solutions, managed router services, and VPN link services; voice and video, conferencing and collaboration, and call and contact centre solutions, as well as hardware comprising handsets, conferencing and collaboration equipment, and accessories; and cloud solutions, such as infrastructure as a service, software as a service, storage as a service, security as a service, and cloud data protection solutions. It also provides managed services, including network, infrastructure, desktop, and IT service management services; licensing and maintaining solutions, such as Amcom Active, which consolidates, controls, and maintains the licensing and maintenance requirements of organization�s IT; and data centre management services. In add ition, the company offers IT services, such as systems; communications; information, communication, and technology consulting; and security, governance, risk, and compliance services. Further, it provides solutions for IT technical and end-user training, and certification and professional development services; and consumer DSL services. Amcom Telecommunications Limited is headquartered in Perth, Australia.